New Arctic route speeds up China’s exports

By Bill SAVADOVE / AFP, SHANGHAI, China

Sun, Aug 18, 2013 - Page 14

The maiden voyage to Europe by a Chinese merchant ship through the Northeast Passage will help the world’s biggest exporter speed goods to market and is a symbol of Beijing’s ambitions in the Arctic.

The emerging Arctic Ocean shipping route north of Russia has been opened up by global warming and cuts thousands of kilometers — and many days — off the journey from China to its key European market.

A vessel owned by Chinese state shipping giant COSCO Group (中國海運集團) left the northeastern port of Dalian last week bound for Rotterdam, the Netherlands, on a 5,400km voyage which Chinese state media said would take slightly longer than 30 days. That is up to two weeks faster than the traditional route between Asia and Europe through the Suez Canal, according to COSCO.

“It’s potentially going to change the face of world trade,” said Sam Chambers, editor of SinoShip magazine. “The Chinese will use the Arctic route in a very big way. It’s all about having options, having alternatives in case of emergency.”

However, China is also eyeing the Arctic for better access to resources to fuel the world’s second-largest economy, such as the natural gas reserves held by political ally Russia in the region.

China — which does not border the Arctic and has no territorial claim to any of it — also recognizes the area’s potential for scientific research and its strategic value as what one Chinese analyst, who did not want to be named, called “military high ground.”

The commercial shipping route is currently only open for about four months a year as polar ice melting due to global warming makes it more accessible.

Three months ago, China gained observer status in the Arctic Council, a group of nations with interests in the region, which is believed to hold rich mineral and energy resources.

The council’s eight full member states are: Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the US.

“The opening of the new shipping route indicates China is participating more in Arctic Ocean affairs,” said Zhang Yongfeng, a researcher at the Shanghai International Shipping Institute.

The EU is China’s biggest export destination, with 290 billion euros (US$385 billion) in goods sold there last year. COSCO, China’s largest shipper, said the new service will slash shipping times, thereby cutting costs and fuel consumption.

“The Arctic route can cut 12 to 15 days from traditional routes so the maritime industry calls it the ‘Golden Waterway,’” COSCO said when announcing the journey.

The company’s 19,000-tonne ship the Yong Sheng — which is carrying a mixed cargo, including heavy equipment and steel — is expected to pass the Bering Strait later this month and dock in Rotterdam next month, it said.

“It will change the market pattern of the global shipping industry because it will shorten the maritime distance significantly among the Chinese, European and North American markets,” Dalian Maritime University professor Qi Shaobin told state media.

However, analysts said developing the route would take time — while lack of infrastructure raised worries over contingencies for potential emergencies.

“In the near term, the economic value for shipping is definitely not big,” Zhang said. “The navigable period of the passage is relatively short ... while the port and pier infrastructure along the route is incomplete.”

China is seeking to grow markets in southeast Asia and Africa, so more trade might flow to the south, lessening the importance of the Arctic route, he added.

However, some Chinese estimates claim that up to 15 percent of the country’s international trade — which totaled US$3.87 trillion last year — could be using the Arctic route in seven years.